Ethanol plant idles, plans to restart when conditions improve

By Holly Jessen | November 08, 2012

The oldest ethanol plant in Indiana, which started producing 28 years ago, has temporarily idled. “Our goal is to restart the plant and recall our employees but at this point it’s hard to say when that will occur,” said Russ Abarr, president of New Energy Corp., a 102 MMgy plant located in South Bend, Ind.

The ethanol plant joins the ranks of other ethanol plants that have idled in the face of high corn prices, high ethanol inventories and low gasoline demand. In general, however, the majority of the more than 200 ethanol plants located in the U.S. are in operation, some at reduced rates. A recent U.S. Energy Information Administration report showed that ethanol production for 2012 was 860,000 barrels per day, down from 910,000 barrels per day in 2011 and 870,000 barrels per day in 2010. The forecast for ethanol production in 2013 is 850,000 barrels per day.

New Energy Corp. went through a permanent reduction in staff in 2011 and reduced production rates in June, Abarr said. Finally, the company was unable to go on in the face of current economic conditions, including a negative commodity margin crush spread. The company laid off about 40 employees. “We do have a staff to continue to maintain the facility,” he said, declining to say how many.

The ethanol plant began producing in late 1984 and was the first ethanol plant in Indiana. Abarr recalled a layoff in 1996, at which time employees were recalled after a fairly short time period. “Ninety-six was a pretty challenging year with the corn crop, corn prices,” he said. “Everybody was terrified that corn actually reached $5 a bushel. Most people would be thrilled if it got down to $5 a bushel now.”